BFI: No deal guidance

No deal Brexit: Answering questions from the screen sectors.

Last updated: 13 September 2019

Brexit will change the way UK businesses interact with the EU, including those working in the screen sectors. 

While it is possible that the UK and the EU will reach a deal on the terms of the UK’s exit by 31 October, or that Article 50 is extended beyond this point under the terms of the Benn Bill, it is essential that businesses prepare for a no deal scenario as far as possible too.

This page provides answers to some of the key questions the screen industries have about Brexit and sets out what the sector might expect in a ‘no deal’ scenario. Please follow the links below to read more on how a no deal Brexit will impact each of the following policy areas:

  1. Movement of people
  2. Movement of goods, equipment and animals
  3. Access to European funding and programmes
  4. Tax reliefs and co-production
  5. AV regulation
  6. Withholding Tax and financial transfers
  7. European policy and research

The BFI will continue to update the page as further detail emerges. We continue to work very closely with the Department for Digital, Culture, Media and Sport and across Government as well as with industry and European partners to help secure the best possible outcome for the screen industries in both deal and no deal scenarios, enabling us to sustain the closest possible working relationship with Europe in the future.

If you have additional queries or concerns, please email brexitadvice@bfi.org.uk

1. How would a no deal Brexit affect the movement of people?

What would happen to EU citizens currently living in the UK in a no deal scenario?

The Prime Minister has set out his intention to safeguard EU citizens’ rights in both deal and no deal scenarios.

The Prime Minister has said that EU citizens resident in the UK before 31 October would continue to be eligible to register through the ongoing settlement scheme. This allows EU citizens that have lived in the UK for five years or more to apply for ‘settled status’, allowing them to stay here permanently. Anyone that has not been in the UK for the requisite five years may apply for pre-settled status, allowing them to remain in the UK until they have reached the five years required to apply for settled status. The deadline for applications for either settled or pre-settled status in a no deal scenario is December 2020.

This system is based on terms set out by the Withdrawal Agreement rejected by Parliament. It is unclear whether Government intends to introduce new legislation in order to underpin the registration system. As it does not require EU citizens currently resident in the UK to have secured permission to stay in the UK until December 2020, it is also unclear how employers are expected to distinguish those EU citizens already living in the UK from those arriving after October 2018, who it is expected will not be granted the same rights to work and live in the UK, but for whom the Government is yet to set out its plans. The Government has said that it will release more detail on this shortly.

Further detail on how to apply for the EU settlement scheme is available here.

What about UK citizens living in the EU?

In a no deal scenario, the UK cannot unilaterally guarantee the rights of UK nationals currently living in the EU. It is making strong representations to the EU to provide similar guarantees for UK nationals in the event of no deal. The agreement on citizens’ rights already negotiated with Switzerland makes provisions for citizens’ rights even in a no deal scenario.

What about EU citizens arriving in the UK after a no deal Brexit?

The UK Government has stated that ‘freedom of movement as it currently stands’ will end after the UK leaves the EU on 31 October. A temporary system will be implemented allowing EU citizens to enter the UK for short trips, with those looking to stay for a longer period able to obtain temporary leave to remain status lasting up to three years. This system will remain in place until January 2021, after which point the Government intends to introduce a new points-based immigration system. More information on this new permanent immigration system is to follow.

Applications for temporary leave to remain will open after the UK leaves the EU and will involve a simple online process and identity, security and criminality checks. EU citizens will receive a digital status lasting three years entitling them to work and rent property during this period. EU citizens wishing to stay on in the UK after their temporary status expires will need to make a further application under the new points based immigration system.

Employers will not be required to distinguish between EU citizens who moved to the UK before or after Brexit until the new, points-based immigration system is introduced from January 2021. EU citizens will be able to prove their right to work using their passport, identity card as now, or using their digital status proving temporary leave to remain.

More on this proposed system can be found here.

Under the previous Prime Minister, the Government published an ‘Immigration White Paper’ setting out plans for a new immigration system to be introduced from January 2021. A statement from Government said it is currently developing improvements to this proposed system and will publish detail in due course. The original White Paper in question can be read here.

2. How will a no deal Brexit affect the movement of goods, equipment and animals?

How will a no deal Brexit affect the temporary movement of goods and equipment between the UK to the EU (e.g. filming equipment)?

Under no deal, temporary movement of goods between the UK and EU will be subject to rules similar to those in place for temporary movement of goods with other non-EU countries. While precise rules vary depending on the nature of the goods to be moved, examples of processes to be followed may include the use of ATA carnets or customs declarations. The UK government provides advice on moving goods into the UK temporarily following a no deal here, while more general advice on how to use carnets for temporarily moving goods around the world is available here.

What would a no deal Brexit mean for the movement of animals?

A no deal Brexit will result in changes to process around importing and exporting animals respectively. There are different sets of rules for horses, fish, pets, endangered species and other animals in both import and export scenarios.

The UK Government has released guidance on exporting animals in a no deal scenario here, as well as on importing animals here.

Will rules around driving in the EU change after a no deal Brexit?

There will be additional requirements on UK drivers driving in the EU after a no deal Brexit. In addition to their license, drivers may require an international driving permit (IDP). The kind of IDP required varies by country. Respective IDP requirements can be checked here.

Drivers will also need to travel with a motor insurance green card, a vehicle log book (or relevant documentation if you’re renting the car) and display GB stickers and a UK registration plate.

There are additional changes for lorry and good vehicles, which can be checked here.

3. How would a no deal Brexit impact access to European funding and programmes?

What would a no deal Brexit mean for the Creative Europe programme?

This question can be split into two: what a no deal Brexit would mean for the UK’s participation in the current Creative Europe programme, which runs until 2020, and what it would mean for its participation in the longer term.

Will the UK be able to access Creative Europe immediately after a no deal Brexit? 

In a no deal scenario, the UK will fall out of the Creative Europe programme on Brexit day, 31 October. UK applicants will no longer be eligible to submit new applications for funding after this point. While the European Commission has suggested that those beneficiaries with a funding agreement in place before Brexit may continue to receive payments as normal if the UK agrees to honour the financial commitments it has already made to the programme, the Prime Minister has stated that the UK will refuse to pay this money in a no deal scenario. Under the previous Government, HM Treasury said that it will replace funding for those awardees which had been selected for funding by the UK’s exit date. More information on the guarantee can be found here. It is as yet unclear what will happen to applications that have been submitted but not selected by the exit date.

Creative Europe Desk UK’s advice to UK companies is to continue applications for forthcoming Creative Europe calls, but to note that these applications may become ineligible in the event of a no deal Brexit. The Desk can provide information and guidance on new applications as well as on projects with agreements already in place and can be contacted here.

The BFI is working closely with DCMS to find remedies to this loss of funding in the long term.

Will the UK be able to access Creative Europe in the longer term following a no deal Brexit?

A new Creative Europe programme is due to be put in place to cover the period 2021-2027. In a no deal scenario, future participation for the UK may be possible – as third countries can participate – but this would be contingent on political developments between the UK and the EU following a no deal Brexit. The current Government has yet to set out its position on participation post-2020. The BFI is working with Government to make sure proper financial support is being considered for the screen sector in the event of a no deal.

Should the UK be considering rejoining Eurimages?

The BFI committed to look at rejoining Eurimages as part of its BFI2022 strategy. This review was also a key recommendation of the BFI Commission for Independent UK Film. The BFI has since met the Eurimages team to discuss the programme further.

Eurimages has undertaken an external evaluation to inform a review of the goals, programme implementation, governance and decision making processes of the organisation. The outcome of the review is available to read here. Proposals for changes to Eurimages will be presented to the management board in October 2019. With the programme subject to potential change, the BFI believes the UK should wait until this review is completed before investigating membership further.

Additionally, industry has made it clear that participation in Creative Europe remains its priority in Brexit negotiations. The BFI is currently focusing its efforts to promote the interests of the screen sectors on continued membership of the Creative Europe programme at this moment in time.

Would the UK remain a part of the Europa Cinemas network following a no deal Brexit? 

The Europa Cinemas network is supported by Creative Europe MEDIA funding. In a no deal scenario, the UK will automatically become ineligible for the Creative Europe programme, meaning UK cinemas will no longer be able to access the MEDIA funding made available through the Europa Cinemas network. As UK films will no longer qualify for MEDIA support, non-UK cinemas will no longer be incentivised to programme them. Unless a way can be found to negotiate a more bespoke kind of participation, this will effectively mean the end of UK membership of the Europa Cinemas network for the foreseeable future (see answer to question on Creative Europe above).

4. How would a no deal Brexit impact tax reliefs and co-production?

Would a no deal affect UK tax reliefs?

The UK’s creative sector tax reliefs will not be affected by Brexit in either a deal or no deal scenario. This includes those available for film, high-end TV, animation programmes, children’s television and video games. In the BFI’s recent Screen Business report, the previous Chancellor restated Government’s commitment “to supporting [the UK’s] highly-skilled and innovative creative industries through creative sector tax reliefs”. Content will still qualify for the applicable Creative Sector Tax Relief if it passes the UK’s relevant cultural test. Creative sector cultural tests will also continue to recognise EEA content and personnel regardless of whether the UK secures a deal with the EU.

More information on the UK’s screen sector tax reliefs can be found here.

Would a no deal Brexit affect UK companies looking to access EU tax incentives?

In both a deal and no deal scenario, some minor changes will be required if the UK is to continue to qualify for incentives in some EU Member States after it has left the EU. The UK is currently able to qualify for many of these incentives because its personnel have EEA status. As UK workers will lose this status after a no deal Brexit, amendments are required to ensure UK workers remain eligible under the terms of the relief. The UK Government and the BFI are working to ensure that Member States undertake this work where possible.

The BFI continues to be able to issue European Certificates of Nationality.

Would the UK still be able to co-produce with EU partners following a no deal Brexit?

All co-production agreements including the bilateral co-production treaties and the European Convention on Cinematographic Co-Production signed by the UK will remain in place after Brexit in either a deal or no deal scenario. The European Convention on Cinematographic Co-Production is governed by the Council of Europe, not the European Union, and the UK will continue to be a party to the Convention. In addition, on 7 February 2019 the UK Government officially signed the revised Convention which confers added flexibility to UK producers and their international partners whose countries are signatories. This demonstrates the UK’s commitment to working with Europe and other international territories. Following the signing, this will undergo the full legislative process to be ratified and brought into force.

The UK’s bilateral treaties with Australia, Brazil, Canada, China, France, India, Israel, Jamaica, Morocco, New Zealand, Occupied Palestinian Territories and South Africa form part of UK legislation and therefore are not affected by Brexit in either a deal or no deal scenario.

Further information on how to pursue co-production is available here.

Are any changes expected to state aid rules following a no deal Brexit?

The state aid regime helps regulate how public authorities provide advantages to organisations that could potentially distort competition. This ensures a level playing field for businesses operating across the UK and influences their level of competitiveness relative to international counterparts too. Advantages can be considered to be anything which an organisation could not get on the open market, such as grants, loans and tax incentives. It is an important consideration for the screen sectors, as state aid rules govern how public authorities might choose to support culture.

No material changes are expected to the UK’s state aid regime in either a deal or no deal scenario. Under no deal, the EU state aid regime will be transposed into domestic UK law and the Competition and Markets Authority (CMA) will become the UK’s state aid enforcement authority, in place of the European Commission, from the date on which the UK leaves the EU. The Statutory Instrument putting this system into place does not materially alter the substance of the EU state aid framework. The CMA will be required to adopt the existing EU guidelines as statements of policy and publish them by day one of EU Exit. 

Government provides further guidance on State Aid in a no deal scenario here.

5. How will Brexit impact regulation affecting AV trade?

Will UK films and TV programmes still count as “European works” following a no deal exit?

In both a deal and no deal scenario, works originating from the UK will still be considered European works for the quotas set out in the European Union Audiovisual Media Services Directive (AVMSD). This has been confirmed by both the UK Government and the European Commission. This is because the AVMSD rules concerning the definition of European works state that a work can qualify if the work originates in a European third State party to the European Convention on Transfrontier Television (ECTT) of the Council of Europe. The UK is party to the ECTT and will continue to be party once it leaves the EU. A note with further information can be found here.

In a no deal scenario, the UK will not be required to implement revised AVMSD requirements setting a 30% quota for European works on SVoD services. However, the longstanding quotas on broadcasting set out in the European Convention on Transfrontier Television will continue to apply in the UK.

Would a no deal Brexit affect laws on intellectual property and copyright?

The UK and other EU Member States are party to the main international treaties on copyright and related rights. These international rules help underpin copyright legislation in all Member States of the EU and do not depend on the UK’s membership of the EU.

There is also a body of EU law on copyright and related rights that goes beyond the provisions of the international treaties. These mechanisms are unique to the EU and provide reciprocal protections and benefits between EU member states. The most recent addition to this body of EU law is the Copyright Directive which entered into force on 7 June 2019. Member states have 24 months to transpose this Directive into domestic legislation.

In a no deal scenario, the UK will not have to implement the Copyright Directive. However, the UK’s continued membership of the main international treaties on copyright will ensure that the scope of protection for copyright works in the UK and for UK works abroad will remain largely unchanged. Those elements of EU copyright law already incorporated into UK law and which do not depend on reciprocity will continue to apply. In a no deal scenario, the UK will be treated by the EU and EEA as a third country and the reciprocal elements of EU law on copyright will cease to apply to the UK.

For the screen sector, these mechanisms include:

  • Portability of online content service: The Portability Regulation will cease to apply to UK nationals when they travel to the EU. This means online content service providers will not be required or able to offer cross-border access to UK consumers under the EU Regulation. UK consumers may see restrictions to their online content services when they temporarily visit the EU.
  • Country-of-origin principle for copyright clearance in satellite broadcasting: UK-based satellite broadcasters that currently rely on the country-of-origin copyright clearance rule when broadcasting into the EEA may need to clear copyright in each member state to which they broadcast. Broadcasters may want to consider whether they need to seek additional copyright permissions.
  • Orphan works copyright exception: UK-based cultural heritage institutions that make works available online in the EEA under the exception may be infringing copyright. Institutions that currently use the exception may want to consider whether they need to remove works from their websites or limit access to content on a geographical location basis in the EEA.

Further guidance on all the changes to copyright law expected in the event of a no deal Brexit can be found here.

If the way is cleared for a future trade agreement between the UK and the EU then the place of intellectual property legislation, including copyright, would be expected to be a subject of negotiation in that agreement.

What would a no deal Brexit mean for data transfers?

In a no deal scenario, businesses will still be able to send personal data from the UK into the EU. This is because alignment between the UK and EU data protection regimes will remain strong: the Data Protection Act 2018 will continue to apply in the UK, while the EU Withdrawal Act will incorporate GDPR into UK law. This is due to the degree of alignment between the UK and EU’s data protection regimes.

However, sending data to the UK from the EU may prove more problematic in a no deal scenario. This will require a Data Adequacy Agreement between the UK and the EU, recognising the UK meets required standards around data protection. The European Commission has stated that the UK must become a third country before this is possible, meaning it is highly unlikely that such an agreement will be reached before Brexit day. Under GDPR the EU also requires businesses offering goods or services to individuals in the EEA, or monitor the behaviour of individuals located in the EEA to appoint a representative based in the EU.

In order to mitigate the impact of no deal on data transfers, the ICO recommends businesses use standard data protection clauses. It provides advice on whether this is an advisable step for businesses here.

Government advice on using personal data in a no deal scenario is available here. The Information Commissioner’s Office also provides guidance to businesses on data protection and international data transfers in both deal and no deal scenarios. Advice on protection can be found here, while more on transfers is available here.

6. How would a no deal Brexit affect withholding tax & the movement of money?

How will Brexit impact the payment of tax, interest and royalties between the UK and the EU?

At present, the EU Interest and Royalties Directive (IRD) allows EU companies to make certain interest and royalties payments to associated companies and permanent establishments within the EU without needing to deduct tax from them. This may change following a no deal Brexit.

The EU Interest and Royalties Directive would cease to apply to the UK immediately following a no deal Brexit. This would result in changes to the way interest, royalties and dividends are paid depending on the member state in question. Government provides more detailed advice on each of the issues in question here.

Would a no deal Brexit impact rules around VAT?

VAT rules around domestic transactions will remain the same in a no deal scenario. However, there will be some changes to the way VAT works on transactions with the EU. These are as below:

  • Importing goods: Current rules for imports from non-EU countries will also apply to imports from the EU. The government will introduce postponed accounting for import VAT on goods brought into the UK. This means that UK VAT registered businesses importing goods to the UK will be able to account for import VAT on their VAT return, rather than paying when the goods arrive at the border.
  • Exporting goods: EU member states will treat goods entering the EU from the UK in the same way as goods entering from other non-EU countries.
  • Providing services in the EU: In a no deal scenario, the main VAT ‘place of supply’ rules will remain the same for UK businesses. UK businesses providing digital services will be able to use the VAT Mini One Stop Shop (MOSS) online service to report and pay VAT, but will have to register in an EU member state in order to do so.
  • Claiming refunds of VAT: If the UK leaves the EU without an agreement, then UK businesses will continue to be able to claim refunds of VAT from EU member states but in future they will need to use the existing processes for non-EU businesses. UK business will no longer have access to the EU VAT refund system. UK businesses will continue to be able to claim refunds of VAT from EU member states by using the existing processes for non-EU businesses. This process varies across the EU and businesses will need to make themselves aware of the processes in the individual countries where they incur costs and want to claim a refund.

You can find further information about claiming VAT refunds from EU member states on the EU Commission’s website here.

More detailed advice on each of these issues can be found here.

7. How would a no deal Brexit impact UK membership of European policy and research bodies?

Would the UK continue to be a member of the European Film Agency Directors (EFADs) association following a no deal Brexit?

The UK will definitely remain a member of EFADs in both a deal and no deal scenario. The BFI is one of the founder members of EFADs, which brings together the Directors of European film agencies in 33 countries in Europe (EU, Iceland, North Macedonia, Norway, Serbia and Switzerland). EFAD members are responsible for national funding for the audiovisual sector and for advising their Government on all aspects of audiovisual policy. In total, EFADs members and their governments spend around three billion euros every year through subsidies and tax reliefs to help foster the creation, production, promotion, distribution and exhibition of European audiovisual works including film. As such, EFADs has an extremely strong voice in helping to shape European audiovisual policy.

More on EFADs can be found here.

Will the UK continue to be able to access the reports and statistics produced by the European Audio-Visual Observatory (EAO)?

The UK will definitely remain a member of the EAO in both a deal and no deal scenario. Like the European Convention on Cinematographic Co-production, the European Audiovisual Observatory is governed by the Council of Europe, not the European Union, and the UK will remain a member of the Council of Europe. The UK is set to hold the presidency of the European Audiovisual Observatory in 2021.

More information on the EAO can be found here.

This Q&A contains general information. Any legal information is not advice and should not be treated as such. Any legal information in this Q&A is provided without any representations or warranties, express or implied, in particular we do not warrant that any information is true, accurate, complete, current or non-misleading. No lawyer client relationship shall be created through the use of this Q&A. You must not rely on any information contained in this Q&A. If you have any questions about any legal or finance matter contained in this Q&A, you should consult your own lawyer or finance professional. Nothing in this disclaimer excludes or limits liability for death or personal injury, for fraud or fraudulent misrepresentation or in any way not permitted under applicable law.

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